PGA West Residential Assn. v. Hulven International

PGA West Residential Association, Inc. (PGA West) alleged defendant Dempsey Mork tried to fraudulently insulate the equity in his condominium from creditors by naming Hulven International, Inc. (Hulven), a sham corporation entirely owned and controlled by Mork, as the beneficiary of a deed of trust and note, and by later directing Hulven to foreclose on the condominium. Hulven demurred to the complaint, arguing PGA West's lawsuit was barred by a seven-year limitations period for actions under the former Uniform Fraudulent Transfer Act. The superior court overruled the demurrer and, after conducting a bench trial, entered judgment for PGA West. In this appeal, Hulven argued the superior court erred by overruling its demurrer. According to Hulven, the allegedly fraudulent activities by Mork and Hulven were a “transfer” for purposes of the UFTA and, therefore, this lawsuit was governed by that act and its seven-year limitations period. Because PGA West filed its lawsuit more than seven years after the alleged fraudulent transfer, Hulven contends PGA West's claims were completely extinguished. The Court of Appeal agreed with Hulven that Mork's alleged fraudulent attempt to insulate the equity in his condominium from creditors by naming a sham corporation as the beneficiary on the deed of trust constituted a “transfer” for purposes of the UFTA and that the act's limitations period applied here: "the seven-year limitations period for actions under the UFTA is not simply a procedural statute of limitations that bars a remedy and is forfeited if not properly raised by a defendant. Rather, the UFTA's seven-year limitations period is a substantive statute of repose that completely extinguishes a right or obligation and, under the majority view that we adopt, a statute of repose is not subject to forfeiture." Because PGA West filed its lawsuit after the UFTA's statute of repose had run, its rights under the act were completely extinguished. Therefore, the Court concluded the superior court erred as a matter of law by overruling Hulven's demurrer. View "PGA West Residential Assn. v. Hulven International" on Justia Law